Fha amendatory clause and real estate certification form

According
to industry sources, the FHA home loan program accounts for as
many as 50% of the mortgages issued to home buyers. The reason
for the popularity of the FHA mortgage is due to the low down
payment, lenient credit requirements and
seller paid closing
cost option. The FHA program also benefits home sellers because
of the favorable financing available to prospective home buyers.

One of the conditions of the FHA mortgage is that the buyer,
seller and real estate agents sign a form called the Amendatory
Clause/Real Estate Certification Form. In many sales contracts
across the United States, the FHA amendatory form is built into
the sales contract. However, if the amendatory is not included
within the sales contract, the parties must sign the amendatory
form as an addendum to the sales contract if the buyer is
obtaining an FHA (or VA) loan.

FHA AMENDATORY CLAUSE
It is expressly agreed that notwithstanding any other provisions
of this contract, the purchaser shall not be obligated to
complete the purchase of the property described herein or to
incur any penalty by forfeiture of earnest money deposits or
otherwise unless the purchaser has been given in accordance with
HUD/FHA or VA requirements a written statement issued by the
Federal Housing Commissioner, Department of Veterans Affairs, or
a Direct Endorsement
Lender, setting forth the appraised value of the property of not
less than $ _________. The purchaser shall have the privilege
and option of proceeding with consummation of the contract
without regard to the amount of the appraised valuation. The
appraised valuation is arrived at to determine the maximum
mortgage the Department of Housing and Urban Development will
insure. HUD does not warrant the value or the condition of the
property. The purchaser should satisfy himself/herself that the
price and condition of the property are acceptable.
Source

Some home sellers are reluctant to sign the FHA amendatory form
because they feel it's an undue government regulation or that it
may jeopardize their position in the sale. The reason the
Federal Housing Administration requires the FHA amendatory
clause is to protect the buyer(s) against a
low appraisal. The
FHA amendatory clause states that the buyer cannot be required
by the seller to purchase the home if the appraisal is lower
than the sales price listed on the sales contract. The
amendatory clause also states that the buyer can still go
through with the purchase if he wants, even if the appraised
value is lower than the agreed-upon sales price, but if the
buyer decides not to continue with the sale due to low
appraisal, the amendatory clause requires the seller to return
the buyer's earnest money deposit.

The FHA amendatory clause also states that the appraisal will
determine the maximum loan amount provided by the lender. This
language prevents the lenders from increasing the loan greater
than the value of the property that secures it.

Reluctant home sellers should read the amendatory form line by
line and will see that there is nothing ominous about the form.
It just says you cannot force a sale if the appraised value is
lower than the sales price. If you disagree with the language in
the form and choose not to sign it, then you will lose the sale
and as previously stated, lose 50% of the prospective home
buyers for you house.

Real estate certification form

The borrower, seller, and the selling real estate agent or
broker involved in the sales transaction certify that the terms
and conditions of the sales contract are true to the best
of their knowledge and belief and that any other agreement
entered into by any of the parties in connection with the real
estate transaction is part of, or attached to, the sales
agreement.

The real estate certification states that the seller, buyer, real estate
agent (if applicable) and anyone signing the sales contract acknowledge that all
term and conditions of the sale are included in the sales agreement. In other
words, there are no side agreements not specifically stated in the sales
contract.

Frequently Asked Questions About The Fha
Amendatory Clause

Is the FHA amendatory clause required?

The amendatory clause is required for an FHA home loan that
do not meet the allowable exceptions.

When does the FHA amendatory clause need to be dated?

The amendatory clause must be provided to the buyer prior to
signing the sales contract if the amendatory clause is not
contained in the sales contract.

When is the FHA amendatory clause not required?

The amendatory clause is not required on:

HUD REO sales
FHA’s 203(k) loan program
sales in which the seller is Fannie Mae or Freddie Mac
the Department of Veterans Affairs (VA)
Rural Housing Services
other federal, state, and local government agencies
a lender disposing of REO assets, or
a seller at a foreclosure sale, and
those sales in which the borrower will not be an owner-occupant
(for example, sales to nonprofit agencies)

The calculators and information contained herein are made available to
you as a self-help tool for illustrative use only. Examples are hypothetical.
We can not and do not guarantee the applicability or accuracy in regards
to your individual circumstances. I encourage you to seek personalized advice
from qualified professionals.